Earnings season is kicking off with a lot of confidence, but does that confidence really hold up once you look closer? On paper, things look strong. Companies in the S&P 500 are expected to deliver about 13.2% earnings growth compared to last year, marking a sixth straight quarter of double-digit gains.
Revenue is also projected to rise by 9.7%, the fastest pace since late 2022. Even total earnings estimates have edged up by 0.4% to around $629.3 billion.
Earnings outlook improves, with a catch
What makes this quarter stand out is how expectations have moved. Usually, forecasts get trimmed as earnings season approaches. Not this time. Analysts have raised estimates instead, which signals confidence in how companies are performing.
That confidence also shows in guidance. Out of 110 companies that issued earnings outlooks, 59 were positive while 51 were negative. That is stronger than both the 5-year average of 44 and the 10-year average of 40.
But here is the catch. Is this growth really spread across the market? Not quite. Technology and Energy are doing most of the heavy lifting, with earnings estimates rising by 8.0% and 8.6% in those sectors. Without Technology, overall earnings growth would drop to around 5%. That shows how dependent the market is on a small group of companies.
Oil and currency moves set the next phase
Now add the bigger picture. Oil prices are climbing, partly linked to tensions involving Iran, which could raise costs for many businesses.
At the same time, a weaker U.S. dollar is helping global companies, with estimates suggesting a 10% drop in the dollar could lift earnings per share by 2% to 3%.
So what matters most now? Not just the results, but what companies say next. If guidance turns cautious, even strong numbers may not be enough to keep markets steady.
